Germany's inflation breaks the back of small family farms

"It's just not economically possible," says Thomas Bollig, "without some sort of intervention. We were prepared for climate change, but not for this."

Bollig, 39, is the proprietor of Wittfelder Hof, a mid-sized family farm just south of the city of Bonn in western Germany. The land, he says, "has been farmland since at least the year 1600, but probably since agriculture has existed in this part of the world."

The modern farm was founded by his father in 1982. When Bollig took over in 2019, he decided to turn the farm organic and free-range. A change his father wasn't "thrilled with," he says smiling, "but he came around to it eventually." Now he helps out from time to time, though Bollig does most of the farming himself with just two full-time employees while his wife runs the farmstand.

"Converting to organic farming was a massive undertaking," as he described it, which by law requires a huge reduction in the number of animals, building larger stalls, keeping an entirely different breed of chicken and providing more expensive feed, amongst other things.

"Now I risk having half-built stalls lying in ruins," says Bollig, due to soaring inflation brought on by the war in Ukraine. The cost of building materials has risen an average of 16.5% since this time last year, according to Germany's Federal Statistical Office.

Major changes planned

DBV President Joachim Rukwied spoke about the gravity of the situation: On top of building costs, "fertilizer costs have quadrupled, feed costs twice as much, diesel fuel is no longer affordable," he told public broadcaster NDR.

Moreover, legal requirements for the amount of fresh air and space farm animals can access is set to increase. Converting barns and animal stalls will lead to as much as 80% higher operational costs, including care and animal feed, says the German farmers' association (DBV).

Like many of the current German government's ambitious environmental policies, such as exiting coal by 2030, new agriculture laws demanding that farming becomes more sustainable have fallen from the top list of priorities.

"Things have come to a standstill in terms of animal welfare," said Rukwied, who was also critical of the European Union's Commission ˈOrganic Action Planˈ for farming as "endangering food security in Europe."  The plan includes cutting pesticide use dramatically, ensuring that at least 25% of EU farmland is set aside for organic farming, and banning the use of GMOs.

Rukwied had similarly harsh words for German Agriculture Minister Cem Özdemir, who earlier this year announced plans for a new labeling system for meat products as to their environmental impact and level of animal welfare.

The €1 billion ($1.05 billion) earmarked to assist farmers in implementing the changes needed to meet sustainability regulations is simply not enough, Rukwied told Die Zeit newspaper.

"No farmer has the money for this right now," he said.

Costs up 60-80%ˈ

Instead, Chancellor Olaf Scholz's coalition is focusing on damage control for consumers' bank accounts as inflation hit a staggering 10.4% in October. When it comes to food prices, that number is an even greater 21%. According to DBV President Rukwied, pig farmers like Bolling have been hit especially hard by rising costs.

"About half of the farmers in the industry are going to have to pack it in in the coming years," Rukwied said of pork farmers, citing particularly high energy, food and building costs when it comes to the sustainable upkeep of pigs.

Besides the rise in equipment, maintenance and supply costs, "which in some cases are up 60-80% from last year," says farmer Bollig, "customers just aren't ready to spend twice as much. Organic food is lying unpurchased on supermarket shelves."

Bollig's statement is backed up by studies that show one of the first ways Germans have tightened their budgets in 2022 is by purchasing cheaper food and shopping at low-cost supermarkets. And local media report that many retail chains are refusing to take on the additional costs of increased animal welfare mandated by the government, telling farmers to offer lower prices or they won't stock their products.

Government priorities ˈneed to be realignedˈ

Big non-organic food producers have some protection from skyrocketing prices, the farmer explains because prices with several suppliers have been set a year in advance — but small organic operations like his often can't afford to raise their prices high enough to make the profits they need.

This is compounded by the fact that organic farming requires more highly trained staff whose career path is not considered lucrative despite its significance to society. Like many branches, according to Bollig, small family farms have been struggling to find enough staff to run their businesses.

With both consumers and supermarkets apparently unwilling to pay extra for better animal welfare, it is unclear if small farms can survive without sweeping government assistance.  "I think the politicians are on the right path, they have recognized that we need help, but priorities need to be realigned," Bollig said.

For example, "you get more government subsidies the more land you have. This essentially rewards larger landowners at the expense of smaller ones."

While he commends Scholz's center-left government on implementing consumer protections against inflation such as the gas price cap, Bollig remains skeptical that the government has done enough to protect farmers.

 "We used to be able to plan for these kinds of changes," he says of new environmental regulations.

"Now, everything is uncertain."